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Medical managers, litigation can add to workers comp costs

Medical managers, litigation can add to workers comp costs

BOSTON — Employers in states without workers compensation medical fee schedules tend to spend more on medical management services and litigation to control claim costs, according to the Workers Compensation Research Institute.

While defense attorneys and medical management services can limit workers comp indemnity and medical claim costs, employers should consider where the expenses for such services are outweighing any claim savings, said Carol Telles, senior analyst with Cambridge, Massachusetts-based WCRI.

"Increased use of medical management may help reduce medical costs or cost growth, but there are costs associated with doing that, and those costs have to be considered," Ms. Telles said Friday during the WCRI annual conference in Boston.

Ms. Telles highlighted medical management costs in New Jersey, which does not have a workers comp medical fee schedule and does not require medical costs containment tools, such as utilization review or medical treatment guidelines.

New Jersey saw increased used of medical provider networks for workers comp in 2011, which caused rising medical costs to level off in the last few years, Ms. Telles said. However, medical management costs have risen from 21% of New Jersey workers comp medical costs in 2011 to 23% of medical costs for that state in 2013, the most recent year studied.

Employers also are prone to pay more litigation costs in states with complex workers comp dispute resolution processes or where it is difficult to appeal comp medical opinions, WCRI data shows.

Ms. Telles said litigation-related expenses ranged from about $1,000 per claim in states such as Indiana and Arkansas to nearly $5,000 per claim in Louisiana and California. The majority of those expenses went to defense attorney payments, which reflected lengthier times to resolve comp claim legal disputes, she said.

"In a state with a more complex resolution system, probably what we're looking at are more defense hours billed,” Ms. Telles said. “So that translates into higher defense attorney payments and may be associated also with higher legal expenses.”

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